Precision Drilling to buy Grey Wolf

Revised terms call for paying $1.12 billion and 42 million shares of Precision

By

ChristopherHinton

NEW YORK (MarketWatch) -- Canadian energy-services provider Precision Drilling Trust plans to buy Grey Wolf Inc. for an estimated $1.12 billion in cash and 42 million shares of its stock, the companies said Monday.

Monday's sale price represents a 4.5% increase over Precision's previous and third offer of $10 a share, which Grey Wolf rejected in June because it wasn't superior to its existing deal with Basic Energy Services Inc.
BAS, +8.30%See related story.

As revised, stockholders of Houston-based Grey Wolf
GW
will receive $5 cash and 0.1883 of a Precision share for each share they own, or they can elect for all cash or all stock, subject to pro ration.

Calgary-based Precision (PD.UN)
PDS, +2.59%
said that the deal will be "highly accretive" to its cash flow and that Grey Wolf shareholders will receive proxy statements by the end of the third quarter. They didn't say when the deal is expected to close.

"The combination of Grey Wolf's deep-drilling capabilities and Precision's high-performance systems and technology provides a foundation for immediate international expansion to pursue global oil-drilling opportunities," the companies said in a joint statement.

Indeed, Precision said the deal will establish it as one of the largest land drillers in North America with a combined fleet of 371 drilling rigs, as well as providing 229 service rigs, camp and catering, procurement, rig manufacturing and repair, and wastewater treatment.

Precision is the largest land-based oil drilling company in Canada. The company currently has about 5,550 employees. Grey Wolf employs 2,800.

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